Processing gift aid more expensive than thought 2

Fundraising | Celina Ribeiro | 16 Sep 2010

The cost of processing gift aid claims to HMRC has risen by more than half over the course of this year, it was revealed during parliament ary questions yesterday.

Economic Secretary Justine Greening told parliament that while estimates from March this year put the average cost of processing a gift aid claim was £5, the HMRC now estimates that the real cost is around £8 per claim.

Greening pointed out that the March estimate, which was quoted in a recent report on modernising gift aid commissioned by Charities Aid Foundation, did not include the payroll costs of staff involved in processing the claims.

The expense involved in processing sometimes low-value gift aid claims has been one of the ongoing issues in the debate around reforming the tax incentive, with the CAF report released last week citing it as a reason why Treasury has been reluctant to expand the system or extend transitional relief.

Hannah Terrey, head of policy and public affairs at CAF, said: “The news that it is costing up to £8 to process each gift aid transaction, and not the £5 as previously thought, further strengthens the call for modernising the process.

"There are relatively simple steps that could be introduced today, such as allowing charities to submit claims online, which would reduce this burden. Looking ahead, the use of technology and a streamlining of the process could make further savings for HMRC and help charities to maximise the use of this important tax relief which saw £750m go unclaimed last year.”

Directory: Charities Aid Foundation

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Dave Allwright
Treasurer
NAS-SOMAAG-DEVON
17 Sep 2010

As a branch of NAS we have had a major fundraising event this year which has been extremely successful. We made a branch decision not to claim gift aid on any donation under £50. As I would otherwise have to processed each payment and banked them individually, literally takening hours for pennies. On the other hand not claiming the gift aid will have cost us several '00£ in much need funds. Some of our fund raisers have made very generious donations on the other hand with gift aid element on these at approx £50 each. Then it is worthwhile taking the time. If the system could be simplified you have my 100% backing. Dave Allwright

[Reply]

Cathy Pharoah
Co-Director
CGAP
17 Sep 2010

I fully agree that simplification and streamlining of Gift Aid systems is an important way forward. Are there any costings for the kind of investmement that would be necessary to introduce online submission of claims, as well as of further use of new technology?

[Reply]

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